Prime Yield launches research “NPL&REO in Spain: A steady target in Europe!”

The transaction of NPLs and REOs in Spain are estimated to have reached €90 billion in 2018 (€60 bn of completed deals and a €30 bn pipeline of ongoing transactions), says Prime Yield, part of Gloval, in its latest research “NPL&REO in Spain: A steady target in Europe!”. The report analyses the Spanish NPL market and its deal’s potential, also comprising an outlook over the Economy and the real estate market.

Prime Yield released this research during the event “Real Estate Summit”, held in London on the 23rd January.

“Spain has come a long way in the workout of Non-Performing Loans but continues to have one of the highest stocks in Europe. It is a steady target for global players actively investing in this type of asset in Europe, as it is a very a mature market when compared with other Southern European competitors buy still offering many opportunities”, comments Nelson Rêgo, Managing Director of Prime Yield, a company that is now part of Gloval.

Spain’s NPL stock is estimated to sit at €74,8 billion (as of June 2018), reflecting an NPL ratio of 4.2% (2nd quarter 2018). This means that stock has already shrunk by €114 billion since the peak, in December 2013 (data by Spain Central Bank, Banco de España).

The sale of NPLs (and REOs) has been very active for the past five years in Spain, during which there was no other country in Continental Europe that could offer the opportunities and returns available in this market. The trading of such portfolios has speed up in 2017, with deals closed amounting close to €52 billion (a figure five times higher than the circa €10 bn recorded in 2016). And, the pace has clearly accelerating even more in 2018, with estimates pointing out to €90 billion traded, considering about €60 bn of completed deals and a €30 bn pipeline of ongoing transactions. Reflecting this sales rush, the average amount per portfolio has gone up to €1,0/€1,5 billion (vs €400 to 800 million up until recently). Most active buyers are opportunistic investment funds, specially US private groups with players as Lone Star Funds, TPG, Apollo, Blackstone, Bain Capital and Cerberus Capital Management having a central role as the main purchasers of these assets, while banking institutions such as Santander, BBVA, Caixabank or Sabadell stand out as the main sellers.

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NPL&REO in Spain: a steady target in Europe
NPL&REO en Espanã: Un target firme en Europa

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